Fitch affirms Karnataka

Fitch Ratings said it affirmed Karnataka State Financial Corp.'s Rs. 1 billion issue of 2009 bonds and Rs. 3 billion issue of 2006 bonds at AA-(SO)(ind).

The rating reflects the credit quality of the government of Karnataka, which has extended unconditional and irrevocable guarantees to the bonds, Fitch said.

The rating is also cushioned by the structured payment mechanism, overseen by the trustees, for the timely payment of bond obligations, the agency noted.

The company's credit profile benefits from its improving financial position driven by slower growth in current expenditure in relation to current revenue and fiscal reforms, Fitch said.

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